The Mortgage Bankers Association has asked the Federal Housing Finance Agency to extend the federal refinancing program, set up for homeowners who owe more than their homes are worth and whose mortgages are insured or owned by Fannie Mae or Freddie Mac.
The Home Affordable Refinancing Program ends June 30, but the trade group wants the deadline reset to December 2012, when the federal loan modification program expires. Both programs are part of the federal homeowner rescue plan, Making Home Affordable, rolled out by the Obama Administration in March 2009.
“Many borrowers with negative equity have been able to lower their payments, shorten their loan terms, or refinance into more stable mortgage products, thus putting their families into more sound financial positions,” John A. Courson, the trade group’s chief executive, wrote to the federal agency.
Key among his recommendations is removing or raising the loan-to-value cap. Borrowers aren’t eligible for refinancing help if their primary mortgages are 25 percent higher than their homes’ appraisals. “This cap prevents borrowers from areas that experienced the most significant house declines from refinancing into a more affordable or stable loan payment,” Courson said.
The federal agency has the authority to extend the program. Officials declined to comment.
Critics said lenders have often balked at refinancing under the federal program. As of last November, just under 565,000 homeowners got new loans under the federal guidelines.